ENTERPRISE EDITORIAL: Refineries must pay fair share of taxes

Published
5:00 am CDT, Sunday, April 7, 2019

Southeast Texans are once again grappling with mixed feelings for the petrochemical plants that our economy is built on — appreciation for the jobs they provide, and a desire that some of them pay more tax dollars to the communities that have welcome them.

The latest version of this dispute is playing out in the Port Arthur ISD, where Superintendent Mark Porterie is understandably distressed to learn that Motiva is challenging its tax bill to the district.

As his guest column on Saturday’s editorial page noted, the average homeowner pays out 2.66% of the value of their homestead in yearly taxes. In 2017, however, Motiva and its parent company Saudi Aramco paid only 0.8% of the value of its refinery as taxes. The company is now seeking to reduce this amount, despite being quite profitable. A wire story in our newspaper on April 2 provided a rare glimpse into the financial condition of Saudi Aramco, which had a net profit of $111 billion in 2018.

If your job is hiring teachers and buying fuel for buses, as Porterie is tasked with, these numbers concern you. You don’t have enough money to do your job as well as it should be done, yet you would if large refineries would pay a bit more in taxes.

Taxes are based on the assessed value or a home or business. The Jefferson County Appraisal District thinks Motiva’s refinery is valued at $3.5 billion, but the company believes the number should be only $1.5 billion.

The Port Arthur ISD has been hit hard by this phenomenon, having lost a lawsuit and being ordered to pay back $14.6 million in tax revenues to the Premcor Refining Group and Valero Energy.

The underlying problem here is a loophole in state tax laws that allows companies like Motiva or Valero to find a similar property that has a lower assessed valuation — even one in another state — and use that to appeal its valuation. With many skilled accountants and lawyers, corporations like that can usually find such a property. In essence, school districts and cities get trapped in a race to the bottom as their taxable properties decrease instead of increase.

A similar dispute racked Orange County recently, when Dean Crooks felt he needed to step down as county judge because he wasn’t as enthusiastic as others to offer full tax abatement to Chevron Phillips for a $5.8 billion ethylene expansion. Orange County also saw petrochemical plants get tax abatement in recent years — and then challenge their valuation when the abatement expired.

The Legislature should have closed the valuation loophole years ago, especially since it was probably unintended. But the current session has no mood to take that step, which likely means the status quo continues until at least the 2021 session.

Some plants, it must be said, don’t take advantage of this loophole and pay their fair share. Still, taxes should be based on market value, not a company’s goodwill. But the current system depletes taxing entities like school districts of money they desperately need, and no Southeast Texan should be satisfied with that.